Borrowing against Super... Single Mother friendly lenders

[Inanna]

Okay so I am going through settlement. What I get out of this house when we sell wont be enough to leave me mortgage free...

I obviously due to being on my own with 5 kids want to have as little debt as possible. I have no other debts either personally or from the marriage. I want to buy a home for us & realistically there is not much on offer here much less than 400K. That is for something very very ordinary. I don't mind that - I feel sure that the right house will manifest.

However, I need some information on some of what I have read alluded to. That is borrowing against Superannuation to reduce the cost of a loan. I will be studying next year - & realistically with Imogen's poor health won't be working for a good few years. So I need as little costs to daily living that I can manage.

Does anyone know about borrowing against super?

Any super funds that will allow early withdrawl or at least help with the reduction in mortgage?

What is a reverse mortgage and could this work for me?

Banks that are friendly to single women on income support. I will have in excess of 60% deposit...

Thanks everyone!

[Kitt3n]

Hey beautiful

Unless things have really changed since I have been out of the super loop you can't borrow against super. It's actually against federal legislation for a bank to take super as collateral (as I said, this may have changed but I really doubt it).

Something that you may be able to do is purchase a home through superannuation - you would need to start a self managed super fund to do this. However, a super fund cannot be in debt so you would have to have the full purchase price. This isn't straight forward and you would probably have to put any cash you have into the said super fund.

These are just ideas and are not financial advice in any way shape or form. I strongly suggest you speak to a good financial planner. Meet a few, see what they have to say - don't just go to the FP at your local bank.

Hugs hun, there are ways around things but I just hope you get yourself some real advice

[Inanna]

Okay so if I am purchasing a house $400,00 & I get a $260,00 settlement in cash and then another $200,000 in super if I nominate a super fund that will do this deal I then deposit the $200,000 from the cash settlement into the superfund and then I do what??? I pay it back to the superfund but they already have it??? I am confused...

[Kitt3n]

Yeah don't worry, super/super legislation is crazily confusing!

What you could look at is starting your own super fund, or SMSF.

Setting up a SMSF

Essentially, you would put your money from your settlement into this fund, and also rollover any existing super that you already have. The super fund itself (as an entity) would purchase the home as an investment (so bricks and mortar would be the super investment as opposed to shares/cash etc).

You, yourself, would not own the home, the super fund would.

It can work very well, you just have to set it up correctly

[Inanna]

So do I still have to make repayments whilst I am not working? Once I am working again I of course will be contributing to my super - but until then I won't be (of course! )

[Kitt3n]

no hun, there can't be a mortgage - between the money in your settlement and the money you already have in super you would need to have enough to cover the cost of a property.

[Inanna]

Okay I get that. So effectively I wouldn't have payments so I live mortgage free??? Could it be so??? I basically need to be cutting costs as much as possible to keep my kids in their independent school etc etc. 5 kids is expensive!

So, I could use $200 from the super and $200 from the cash and the fund would own my home but I can live in it and essentially once I am 60 I can sell it? What happens if I want to sell it before retiring age?

[Kitt3n]

So, I could use $200 from the super and $200 from the cash and the fund would own my home but I can live in it and essentially once I am 60 I can sell it? What happens if I want to sell it before retiring age?

Yep - you would put your cash fund into the super and then buy the house. But remember, YOU don't own it, the (your self managed) super fund does.

If you sell it, its not you selling it - its the super fund, so the super fund may be up for capital gains etc.......... (as it needs to be purchased as an investment).....

get a good planner hun!!!